Accounting Report: BHP Billiton and Rio Tinto GRI Standard Analysis

This report provides a comprehensive analysis of BHP Billiton and Rio Tinto, focusing on their adherence to GRI (Global Reporting Initiative) standards, corporate governance practices, and strategic initiatives. Part A of the report delves into the introduction, outlining the companies' profiles and the importance of corporate governance and sustainability reporting within the mining sector. It examines the social and environmental impacts of their operations, comparing their performance and data quality. The report also addresses the challenges BHP Billiton faces in GRI reporting and evaluates the widespread compliance with GRI standards by Rio Tinto. Part B presents a memo analyzing a strategic initiative by Constructicon Pty Limited, evaluating the cost bifurcation, breakeven point analysis of three potential mining equipment products, and the application of a balance scorecard.

ACCOUNTING & FINANCIAL
MANAGEMENT

Contents
Part-A.........................................................................................................................................2
Introduction............................................................................................................................2
1..............................................................................................................................................2
2..............................................................................................................................................4
3..............................................................................................................................................7
4..............................................................................................................................................8
Conclusion..............................................................................................................................9
Memo.......................................................................................................................................10
Part-B.......................................................................................................................................10
References................................................................................................................................17

Part-A
Introduction
The report brings out a discussion on corporate governance and GRI index of BHP Billiton
limited. The company is a public company headquartered in Victoria, Australia. BHP Billiton
limited is the largest mining organisation based on petroleum, mining, and metals. The
company serves areas worldwide by offering the products such as copper, natural gas,
uranium, coal, and petroleum (BHP Billiton limited 2014). Furthermore, with increasing
competition, companies started running behind generating higher profits. Moreover, mining
sector is concerned due to extraction procedure. Mining sector can lead to affect the
operations with social legitimacy, which can cause devastation and further leave the areas
when using the economically valuable resources (Agyemang, & Ansong, 2017). The report
consists of two parts, which has evaluation of GRI reporting and standards.
1.
Overview of social and environmental impacts of operations
Positive or negative social actions can affect the company`s operations and its image among
the stakeholders. As a mining company, BHP Billiton limited faces several social
enforcement regarding the environment issues. However, mining industry has been
emphasizing on the adoption of quality management, CSR, and safety (Global compact
network Australia, 2018). This sector has to undertake environment affects in serious way
because extraction procedure will lead to hamper species. The entire ecosystem is influenced
by the mining exploitation. It creates lack of appropriate practises CSR due to actual
implementation and intentions (Appuhami, & Tashakor, 2017). Mining organisations are
inclined to conduct as per the formal code of ethics. GRI framework is related to techniques,
which collect data showing, innovating and collaborating so that it can become worldwide

reality. This will lead to exploration of emerging trends in the promotion of international
discussion in regards to the corporate disclosures (Global compact network Australia, 2018).
This initiative has been published important GRI (Global reporting initiative) standards.
Several reporting and sustaining factors of GRI includes-
Sustaining and reporting factors GRI
Labour relations 49
Leadership ethics 49
Reporting and transparency 51
Management of resource 51
Product 51
Human rights, compensation and benefits 51
Board of directors 49
As soon as the accomplishment ensures sustainable data with the limited resources, Rio Tinto
has claimed material misstatement in assurance of sustainable data exactly prepared
according to the GRI standards (Global compact network Australia, 2018).
BHP Billiton`s negative impact brings several construction projects has imposed stress on
community, which includes increasing cost of housing, minimum access to the community
accessibility especially health and other sanitation services. Negative social impact is
increasing construction workforce, which further increase lack of the temporary
accommodation facilities. These categories is in table comprises of major element such as
governance (49), community (51), employees (51), and environment (63).
Sustaining and reporting factors GRI Index
Labour relations 49

Leadership ethics 49
Reporting and transparency 51
Management of resource 51
Training, safety and health 51
Diversity 49
Human rights, compensation and benefits 49
Board of directors 49
On the other hand, BHP Billiton limited monitors existing environmental management, which
used to implement reports of proposed expansion. The company has positive environmental
impact, where it manages environmental risks. For example- BHP aims to minimise the
impact to contribute benefits to ecosystems, environmental resources, and biodiversity. BHP
focuses on greenhouse gas emissions, biodiversity, land management, and energy use. BHP
focuses on controlling the avoidance and minimisation of direct and other cumulative effect
in the area of influence. BHP identifies several material risk implementation projects, which
can improve management of resources (Global compact network Australia, 2018).
2.
Comparison and quality of environmental and social performance data as being availed
with other companies-
BHP Billiton limited Rio Tinto
Quality of social
performance
 The key aspect of
BHP Billiton related
to negative impact
includes accessibility
for accommodation,
 Currently, Rio Tinto
contributes global
direct economic
contribution of $42.8
billion. The company

increasing anti-social
behaviour, and
increasing
competitiveness for
traffic congestion
(Tanco, Cat, &
Garat, 2019).
 From 2019 financial
year, the investment
is summed up to US$
93.5 million that
creates economic
value to the local
communities (BHP
Billiton limited,
2019).
runs 994 programs
with the community
development of $192
million.
 The company has
complied with the
sustainability reports
in GRI guidelines.
However, it is seen
that the company has
claimed false
sustainability in
2014. Until now, the
organisation has not
earned the title of
sustainable company
(BHP Billiton
limited, 2019).
Environmental performance Currently, BHP Billiton
contribute to the several
social and environmental
benefits with biodiversity
conservations, climate
change, and mitigation. The
strategies align-
Rio Tinto has accomplished
several principles related to
the promotion of UN global
compact.
Rio Tinto has committed to
understand the
environmental mitigation

Clean water and sanitation
Climate action
Life on land
Life below water
Partnering to achieve the
goals
 BHP Billiton
supports preservation
with the sustainable
use of natural
environment to
benefit future
generation (BHP
Billiton limited,
2017).
The company will soon start
investing to improve how far
the environment is being
valued with the societal
benefits. It can enhance the
development planning and
the demonstration of
approaches to the
implementation benefiting
the future generation
and its impact on the
operations.
For example- the company
wants several internal
standards and other practises
to go beyond local and
international regulations in
sharing and checking the
performance with the
stakeholders.

(Tanco, Cat, & Garat, 2019).
3.
Challenges faced by BHP Billiton when accomplishing GRI reporting
EY has researched that there are several emerging issues to report and manage GRI reporting.
It includes climate changes, financial risks, tax transparency, methods to measure community
impact, and human rights. Furthermore, there are certain barriers to report sustainability-
Rapid evolution of several reporting standards and the frameworks. MNCs often prioritise
their work and profitability but ignore sustainability reports as they are often against
regulations.
New processes are often uncomfortable and difficult because it does not engages
stakeholders. Other challenges for the independent verification include education,
employment creation, corporate collaboration, health, displacement, climate change, solid
waste, and corporate governance (BHP Billiton limited, 2017).
Lack of management`s support and understanding has created fear of uncertain events and
misinterpretation. Mandatory sustainability reporting often emphasis stock exchange at its
competitive disadvantage. This creates exchange risks while discouraging IPOs.
Furthermore, organisations do not prioritise reporting as some parties are opposed to several
regulations. The compliance towards the disclosure compliance of sustainability data by
business organisations is seen as red tape, increased direct costs, and administrative burdens.
Elements of procedure when reporting contributes towards costs such as time for the senior
management, staff to discuss on report content, development, and implementation of data
gathering systems. Implementation of new processes can include staff training. It needs time
to check data and prepare the reports involving internal resources. Demand for appropriate

data on the specific issues “GHG emissions,” which continues to increase (BHP Billiton
limited, 2017).
4.
Evaluation of widespread compliance with GRI reporting standards with Rio Tinto
Further, there is an evaluation of widespread compliances with GRI standards of competitor
named as “Rio Tinto,” which has benefited the potential investors, and current stakeholders
of the organisation.
Rio Tinto has been appreciated with consultation documents on GRI draft. The company has
promoted greater transparency when companies approach to government for taxes. Rio Tinto
believes that there is always a tax transparency by maintaining trust and the credibility. This
clearly signifies that the investors (stakeholder group) approach those companies for quality
assurance as well as trust who has transparency in its financial statements. Creation of
standards through which organisations reports several contribution with responsibility and
integrity in promotion if confidence in organisation and supporting the contribution with
integration. Proliferation of the existing proposition with the mandatory public transparency
in different aspects. GRI is an important play while encouraging and supporting the
consistency across the global mandatory towards the compliance burden for the reporting
entities (Ali, Frynas, & Mahmood, 2017).
Global sustainable standards board develops the quality standards avails clear guidelines,
which has balanced the disclosures with the compliance costs. Rio Tinto is proud of its
positive, which has removed its lasting difference between the communities and nations, in
which they operate. The company has long-term commitment towards the transparency as the
evidence with voluntary development of tax paid report.

The quality of maintaining transparency will attract all the stakeholders especially the
customers and investors. As the external stakeholder, customer look for high quality service
experience. Investors will look for the opportunity in appropriate company to grow and
increase their earnings. The company`s standards related to environment needs all the
required sites to include local communities in checking the activities and sharing the
performance at the same time (BHP Billiton limited, 2014).
Conclusion
For comparing the GRI standards and compliance, the report uses Rio Tinto report for the
analysis. Mining industry uses the natural resources in the operation of the extraction
procedure. Between both the companies, it is seen that BHP caters its social corporate
responsibility based on social impact and it has the ability to cater the environment
appropriately. Therefore, the company has proposed strategies to improve the environment
around the operations. On the other hand, Rio Tinto has also conducted several activities to
cater society and environment. The report has elaborated GRI index for both companies while
comparing them.

Part-B
Memo
To- Top-level management of construction pty limited
From- department of management accounting
Date- 10 January 2020
Subject- strategic initiative in the development of mining equipment
This memo consists of cost bifurcation based on the construction company. Further, there is a
breakeven point analysis of the all the three products by associating their variable and fixed
cost. However, in order to achieve the desired profit of Rs. 350000, the company has to sell
particular number of units of each element.
1. Major costs related to ongoing operations for strategic initiative of the construction
company are direct cost, indirect cost, product costs, fixed and variable costs. CVP
relationship is dependent on the appropriate description of cost behaviour. Number of
factors such as volume, efficiency, several production changes, and sales mix affects
it.
Fixed cost- The costs is independent, as it does not change with output production.
Fixed cost includes cost of building, legal bills, and depreciation (based on straight
line).
Variable cost- This cost is dependent on outputs as being produced. For instance-
production of more cars uses more metal. Construction Company will use more
bricks, cement, equipment, electricity, overhead utilities, telecommunication
expenses, and other tools (Hilaire et al., 2016).

2. Balance scorecard is the strategy performance tool, which is used by managers to
track the execution of activities by staff within the action control and check the
situations. Sustainable balance scorecard has been used to examine the success of
initiative-
Perspective Objective Measures Reasons
Financial To maximise the
profit margin
1. To succeed
at financial
level through
measures,
targets,
initiatives,
and
objectives.
2. Goals
appearing to
the
shareholders
must be
target
initiative.
1. The company
must act as a
reason, which
can ensure
effective
collaboration.
2. Government
agencies to the
contribution to
the effective
strategic
planning
(Calabrò,
2017).
Customers To attain
maximum
customers in the
market
1. Measurement
of
customer`s
satisfaction
through
The analysis
procedure will start
with review of
internal processes
and goals of